Okay, I think we can all agree on the fact that while Microsoft's Surface machines might not be particularly useful for most of us, we all secretly want one, or something similar. Thanks to EXOPC, you'll now be able to: for $1299, you'll have a 40" multitouch interactive desk.

Why not just use an OS you already have a license for or can legally obtain?

Because I like my freedom. I don't want to share my privacy with somebody that will sell it to whoever will pay for it, I don't want to have my data locked down by whatever obscure format they decide I should use, I don't want to be forced to pay for an upgrade and I want my hardware to be usable even after the vendor decides it's obsolete, etc...

As for the hardware, one may potentially invalidate the warrenty but that should only become illegal if you then defraud the company over a warrenty issue.

Why on earth would installing a different OS or modifying the hardware be illegal in and of itself?

Because that would probably involve some reverse engineering, breaking trade secrets and/or patents?